Nonprofit Board Crisis

Nonprofit Fiduciary Duty of Care

While I've stated it often, I don't believe that the nature of a nonprofit board's fiduciary duty of care can be stated enough.  Here's a nice brief presentation.

Nonprofit Governance: The Board’s Fiduciary Duty

BY REBECCA L. HAGAN ON JANUARY 22, 2015POSTED IN NON-PROFIT, NONPROFIT, NONPROFIT BOARD

In the wake of various scandals and stories of wrongdoing in the nonprofit sector, the federal government has placed an increased emphasis on nonprofit regulatory compliance.  A nonprofit is required to provide information about its board’s state law fiduciary duty when it files its Form 990 return each year.  But what exactly are a board’s fiduciary responsibilities?

A fiduciary is a person who has a relationship of trust or confidence with another.  In the case of a nonprofit, the fiduciary relationship is one-sided:  the relationship is designed to meet the needs of and protect the nonprofit only, and the fiduciary must act without concern for his or her personal needs.  A nonprofit’s board operates as the primary decision-maker for the nonprofit and bears the responsibility and accountability for the actions of the nonprofit.

Under the laws of most states, the fiduciary duties of a nonprofit board and its members can be broken down into three primary duties:  the duty of care, the duty of loyalty and the duty of obedience.

(1)        Duty of care:  The duty of care requires the board and its members to have a certain level of competence, to exercise reasonable care, to take an active interest in the nonprofit’s activities and to act reasonably and in the best interests of the nonprofit.  The board and its members must act honestly and with common sense and informed judgment in light of particular facts and circumstances.

(2)        Duty of loyalty:  This duty addresses the faithfulness of the board and its members.  The board members must put the interests of the nonprofit ahead of their own agendas and interests and must avoid any self-dealing.  Board members must have undivided allegiance to the nonprofit and their conduct must further the goals of the nonprofit above all else.  In order to ensure the duty of loyalty is met, it is important for a nonprofit board to establish and enforce an appropriate conflict-of-interest policy. 

(3)        Duty of obedience:  Board members have a responsibility to be faithful to the mission of the nonprofit and must not act in any manner that is inconsistent with the purpose or goals of the nonprofit.  Board members must comply with all applicable laws, regulations and reporting requirements.

By establishing appropriate governance policies, selecting dedicated and educated board members, and ensuring that the members of a nonprofit’s board are engaged and faithfully executing their duties, a nonprofit’s board can ensure compliance with its fiduciary duties.

Nonprofit Money Moves Mission

I think it can be safely said that nonprofits that have revenues and equally important, savings, have an enhanced ability to pursue mission.  It of course is worth saying that volunteers and donated goods and services matter and matter a lot, but unrestricted assets and income equally matters and often are a game changer for a nonprofit's pursuit of ission.

So what happens if, in a moment, assets dissapear?  Impossible you say?  Not really as I regularly feature events when internal thefts wipe-out the short-term ability of some nonprofits to operate.  Greenpeace India on the other hand has experienced a real stoppage of the use of its money.  The India Reserve Bank put a freeze on Greenpeace's (and five other nonprofit's) financial assets.  Greenpeace activities in the pursuit of mission have actually begun to do their job and the government has retaliated - pretty much a tit-for-tat event.  The courts have told the India Reserve Bank it has to un-freeze the assets so Greenpeace's temporary crises is pretty much over.  

I'm pretty confident that Greenpeace's board, like the other nonprofit boards, dedicated to what the believe is right for the public and the earth, knew what to expect from the government it was holding accountable. This board understood the financial risks but proceeded to act.   I'm also believing that the board had a plan in the event of government action - use of media, other partners ready to jump-in, perhaps even other methods for paying for its expenses. 

I offer that this is good and responsible governance. Noting that during this week we have recognized and honored the work of Martin Luther King and the nonprofit boards who stood beside him, kudos to Greenpeace and its sister organizations and to all nonprofit boards who have pursued mission regardless of the risks.

To learn a bit more about the Greenpeace situation, check here.

Nonprofit Consolidation

There can come times in a nonprofit's life that standing alone is just not a viable option.  Perhaps it's   external forces that point to the reality.  Perhaps it's internal forces.  Well, in Chicago, the independent Roman Catholic Schools are facing this reality, not necessarily and fully willing, but pursuing to take their strengths and create a new regional institution.  The Chicago Tribune story tells more but I think this a helpful lesson for the many nonprofits who choose to struggle on alone over finding ways where similar institutions might still be able to achieve mission better, together.

 

After announcing that 13 Roman Catholic schools will close or consolidate by the end of the school year, the Chicago Archdiocese confirmed Tuesday that Archbishop Blase Cupich has suggested six more schools on the Northwest Side collaborate starting in the 2016-17 school year.

Though how the collaboration will play out is not clear, St. Pascal, St. Constance, St. Cornelius, Our Lady of Victory, St. Tarcissus, and St. Thecla would work together to develop a regional plan for Catholic education on the city's Northwest Side.

Highwood's St. James School to merge with Holy Cross

Pastors, principals and parish communities must decide in the months to come if they are going to follow the archbishop's proposition and participate in the pilot project. If they don't, they will forgo all current and future financial support from the archdiocese, school leaders said.

The collaboration would be part of a regionalization of Catholic schools, the combining of several parochial schools in a given area into one independent academic institution that is sustained by the students, faculties and staffs, and finances of the parishes involved.

St. Cornelius was one of the first schools chosen to enter into the process, according to the Rev. Daniel Fallon, pastor of St. Cornelius, in a letter to his congregation last fall. According to Fallon's letter published in the church bulletin, the option to regionalize St. Cornelius came up at the "last minute" to avoid closing. Two other nearby schools did close: St. Ladislaus and St. Hyacinth.

State of Chicago's archdiocese

"This initiative is underway, and we are involved," Fallon said. "That's a fact. We have the opportunity to help shape Catholic education in the archdiocese for years to come. That's an exciting prospect."

Under pressure from the archdiocese in September, St. Cornelius raised nearly $250,000 within a month, largely from grass-roots efforts. A parent organized a multi-family garage sale while others went door to door to warn the neighborhood that the school could close.

 

Elizabeth Durkin, a mother of three students at St. Cornelius, said a local resident showed up at the garage sale with a cash donation saying that, although she had no connection to the school or parish, she had heard the news and didn't want a local school to close.

"People were inspired enough to dig deep in their pockets simply to send a message that the school should have a future," Durkin said.

The school also received support from other nearby parochial schools. Mary Seat of Wisdom in Park Ridge, St. Thecla, Epiphany School and Our Lady of Victory all held fundraisers for St. Cornelius, a gesture St. Cornelius had extended to Our Lady of Victory the previous year when it almost closed its doors.

"That reciprocal support represents the solidarity that Catholic school families feel for others in our system — we may be rivals at times on the athletic fields, but I don't think any of us ever want to see another Catholic school be closed," Durkin said. "It's really a horrible outcome, and we can all feel each other's pain over it."

The Rev. Paul Seaman, pastor of St. Pascal, said he welcomes the pilot project, which will make Catholic education available for Catholic students who want it. He also thinks regionalization would deliver a "better product for our families," including a "healthier diversity."

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Twitter @TribSeeker

Nonprofit Fiduciary Duty of Care and Prudence

Prudence is the standard for what is fulfilling one's fiduciary duty of care is to do what others in a similar situation (aka business) would do facing similar challenges and opportunities.  I don't believe I would be going out on a limb in questioning whether the board of Architecture for Humanity was prudent in the decisions they made that led to the demise of their insttution.  At very minimum, the question as to whether or when nonprofit board governance matters  and when shouldn't board members and the board collective be held accountable is answered in this case.

What do you think?

A Leader in Socially Conscious Architecture Is Closing Amid Financial Woes

By ROBIN POGREBIN    JAN. 17, 2015 New York Times

Architecture for Humanity, a nonprofit design group that sought to repair the world with socially conscious construction in places like Kosovo, Haiti and hurricane ­ravaged Mississippi, has abruptly closed its San Francisco headquarters and plans to file for Chapter 7 bankruptcy protection.

The organization has not officially announced its demise, but its founders, who left in 2013, and the chairman of the board confirmed the news on Friday.

“Our hearts are with the staff and chapter members who worked so hard to build a wonderful organization that did so much for communities around the world,” the founders, Cameron Sinclair and Kate Stohr, said in an email to associates. Mr. Sinclair and Ms. Stohr, who are married, started the group in 1999 and are widely seen as leaders in the field of altruistic architecture.

Matt Charney, the board’s chairman, said in an interview on Friday that the group had tried to survive by reducing its payroll, selling its main building and moving to smaller offices, but those steps had proved inadequate. The roughly 30 employees who remained were laid off on Jan. 1.

“Very recently, it just became clear that we would be unable to completely reduce our operating deficit,” Mr. Charney said. “We ultimately lacked the funding to continue.”

It is unclear what will happen to the group’s domestic chapters, which are run by volunteers, or its international chapters, which operate independently. There are about 60 chapters in all.

“Our hope is they will continue this work in some fashion,” Mr. Charney

 

said. “I don’t think Architecture for Humanity going out of business is going to stop the people dedicated to this work from doing this work.”

Others in the field of socially conscious architecture mourned the group’s disintegration.

“While there are open questions about the culture and finances of this organization over many years, there is no question that they put humanitarian design on the map,” said John Cary, the former executive director of Public Architecture, a nonprofit based in San Francisco. “One of the things Architecture for Humanity did best was capture the public’s imagination about the potential of design, particularly in times of disaster, in a way few before it ever had.”

The details of what hastened the group’s end were unclear. But questions arose about its spending under the stewardship of Mr. Sinclair, a 2006 TED Prize winner, and Ms. Stohr.

Both said they had left of their own accord with the organization’s finances in order.

“Part of our thought process was that if this is a truly sustainable organization, it should survive without its founders, and 15 years was a good time for that to happen,” Mr. Sinclair said in an interview last week. “We never had a deficit for 14 years, we grew exponentially. Our biggest problem was, I think we grew too quickly.”

Eric Cesal, the most recent executive director, said that the shortfall reached $2.1 million at the end of 2013, an untenable sum for an organization whose annual operating budget ranged from $2 million to $12 million, depending on the scope of projects in a given year.

Ms. Stohr acknowledged in an interview that the organization “had some debt” but said “we were figuring out how to correct that.” She added that, contrary to the assertions of some former staff members, Architecture for Humanity did not promise more than it could deliver.

“There were lots of projects we said no to,” she said. “Some projects were too small or the timeline was hard or we did not have the right staff person or it was an insecure place to work.”

 

For many volunteers and staff members, the organization — whose prominent financial backers included the Clinton Foundation and the Curry Stone Foundation — was an inspiring vehicle for using design skills for something broader than showy buildings underwritten by corporations or wealthy individuals.

Mr. Sinclair told The Guardian in 2006: “Think about a prestige architect like Zaha Hadid. There are probably 20 people in Britain who can afford to commission her. I, on the other hand, have somewhere between four and five billion people on the planet who are looking for my help..”

Among the group’s projects were a soccer field in Rwanda built to help unite members of the Hutu and Tutsi tribes, and the Football for Hope program — with FIFA and streetfootballworld — which builds community centers in Africa.

Several projects remain undone: a school in the Philippines; a joint project with Nike to rebuild the disaster­stricken area of Tohoku, Japan; and renewal efforts in New Jersey areas damaged by Hurricane Sandy and parts of Oklahoma hit by tornadoes.

“There were definitely cost overruns on projects,” Mr. Charney said, adding, “I hope that issues that have caused the closure, while important, I hope the overwhelming good that Architecture for Humanity has done can overshadow that. We’re proud of the work.”

Nonprofit vs. Nonprofit

In my experience, when a nonprofit dies, it dies.  Whatever remaining assets the board may possess are sold.  The name goes into retirement.  Board members go off to other activities.

No so it appears for the New York City Opera which has two bidders debating in court for the rights to the name and offerings that will resolve left-over financial challenges that were to date unresolved.

I'm scratching my head over exactly how all this makes sense but -- well, there is believed to be assets to be turned into audience and income.  Really?  

Wall Street Journal By JENNIFER SMITH And SARA RANDAZZO 1/18/2015

Two bidders hoping to revive the bankrupt New York City Opera are preparing to square off in court next week at an auction for the opera company’s name and assets.

In one corner is Roy Niederhoffer, a former City Opera board member backing a plan to reboot the company under the direction of Michael Capasso, the head of a small Manhattan opera company in the process of being wound down.

In the other is Gene Kaufman, an architect who has also expressed interest in restarting City Opera but whose prior proposals have failed to win favor with the defunct company’s board.

Last month, the board agreed to sell the New York City Opera name—as well as its thrift shop and other assets—to NYCO Renaissance Ltd., a nonprofit group chaired by Mr. Niederhoffer.

Under the deal, which requires court approval, the group would pay the board $10,000 and settle more than $500,000 in debts, as well as assume certain liabilities.

The agreement didn’t include City Opera’s endowment, which shrank to less than $5 million by the time the company sought Chapter 11 protection in October 2013.

Mr. Kaufman subsequently submitted a bid, which boosted the amount of cash at closing to $50,000 but otherwise largely mirrored the provisions in the agreement between NYCO Renaissance and the board.

Whoever ends up with the City Opera name, rebuilding the scrappy company once known as “The People’s Opera” involves daunting challenges.

New York City is already home to opera companies big and small, and the New York Philharmonic, with Lincoln Center for the Performing Arts, will mount three new opera productions starting in the summer.

Mr. Niederhoffer, a hedge-fund manager and amateur musician, has pledged more than $1 million to the effort, which he said had secured a total of $2.6 million in promised support.

“Our signed agreement with the City Opera Board, the financial support we have received and the commitment of time and energy from our own board reflect the quality and viability of our plan,” he said.

To drum up further support, NYCO Renaissance is planning a March benefit to celebrate Julius Rudel, a City Opera conductor who died last year. It is set to take place at Jazz at Lincoln Center’s Frederick P. Rose Hall, where the group hopes to present future City Opera seasons.

Mr. Kaufman’s next steps aren’t as clear. He has formed a nonprofit entity, Opera New York Inc., and is awaiting approval of that status, according to his attorney, Arthur Steinberg.

Judge Sean Lane in U.S. Bankruptcy Court in Manhattan must sign off on any proposed deal.

A hearing on Tuesday will double as an auction, with NYCO Renaissance and Mr. Kaufman making competing offers until the bankruptcy estate declares one the winner.

“We have made a bid that meets the court’s requirements, and we look forward to the auction,” Mr. Kaufman said through his spokeswoman.

If Mr. Kaufman prevails, he will owe NYCO Renaissance up to $20,000 to cover a breakup fee and expense reimbursements, filings show.

If the winner doesn’t complete the deal within seven days of the judge’s approval, the losing party could still take home the prize.

Creditors also could benefit if City Opera is revived, though their debts are unlikely to be fully repaid through the bankruptcy process. They include New York City Ballet, which once shared a theater with City Opera, as well as ticket holders, musicians and former employees.

Alan Gordon, national executive director of the American Guild of Musical Artists, which represents City Opera’s singers and stage managers, was skeptical of both proposals. He said he was unclear on what Mr. Kaufman proposed and described Mr. Niederhoffer’s plan as unrealistic and underfunded.

Nonprofit Board Positioning

Not singular to the arts and despite what is alluded to in the following Wall Street Journal Article, nonprofits compete for donors. And, when many of the institutions that have a similar market of donors, then pushing the donor needle is real.  Read and learn.

By 

JENNIFER SMITH

Updated Jan. 14, 2015 9:19 p.m. ET

0 COMMENTS

From Museum Mile to the High Line, many of the city’s major cultural institutions are in the midst of costly real estate or strategic projects this year. That means arts fundraisers must polish their pitches, woo patrons with creative naming opportunities—your family name on the passenger drop-off area!—and target the next generation of donors.

Some groups may end up vying for the same wallets, but fundraisers are hopeful that there are enough patrons to go around.

“It’s not survival of the fittest,” said Nancy Raybin, a philanthropy consultant. “There are people who love the Whitney, people who love the Met Museum, and people who love the Guggenheim.”

That’s a good thing, given the scope of projects under way.

For example, the Museum of Modern Art has embarked on an expansion in Midtown, largely privately funded, that will add more than 40,000 square feet of new galleries. Eleven blocks away, the New York Public Library is planning a $300 million renovation of its landmark Beaux-Arts building and the circulating library across the street.

ENLARGE

Workers in a section of the lobby of the new Whitney Museum of American Art building on Gansevoort Street on Wednesday. CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL

The American Museum of Natural History wants to build a new $325 million science and education center for its Upper West Side campus. The addition will be named after trustee and longtime donor Richard Gilder, who seeded the campaign with a $50 million gift (more than $100 million has been raised so far).

Across Central Park, the Frick Collection has proposed adding a new wing that would that boost its space by 42,000 square feet. Meanwhile, in September the Metropolitan Museum of Art is taking over the Marcel Breuer building on Madison Avenue, with programming set to open there in spring 2016.

That space was recently vacated by the Whitney Museum of American Art, which is readying for the May opening of its $422 million new home at the southern tip of the High Line. At its north end, the Hudson Yards development includes Culture Shed, a $360 million multi-use arts space set to begin construction this year.

In the 2015 fiscal year the New York City’s Department of Cultural Affairs added about $120 million in new projects to its capital portfolio. Over the next four years the city’s cultural capital plan includes $772 million in projects ranging from the American Museum of Natural History expansion to developments outside Manhattan.

ENLARGE

Rendering of the proposed Culture Shed. DILLER SCOFIDIO + RENFRO IN COLLABORATION WITH ROCKWELL GROUP

Among them: upgrades to the historic music hall at the Snug Harbor Cultural Center & Botanical Garden in Staten Island, and renovations of the Bronx River Art Center and the Brooklyn Museum’s education division. This fall a new home for St. Ann’s Warehouse, the experimental theater, is also expected to be completed, in a refurbished Civil War-era tobacco warehouse on the Brooklyn waterfront.

With government funding for the arts on the decline in the U.S., much of the burden rests on the private sector.

Individual philanthropy is the strongest source of support for American art museums, comprising 33% of total contributions, according to a 2014 survey by the Association of Art Museum Directors. Foundations and trusts accounted for one-fifth, and corporate giving came to 11%.

Purse strings in the private sector appear to be loosening as the economy strengthens. Between 2009 and 2013, giving to arts, culture and humanities organizations increased by an estimated 22%—to $16.66 billion—according to a 2014 report on philanthropy by the Giving U.S.A. Foundation, a public-service initiative of the Giving Institute, a trade association for fundraising consultants and the nonprofit services industry.

Individual donors and foundations have both benefited from a resurgent stock market, said Michael Hamill Remaley, senior vice president for public policy and communications at Philanthropy New York.

ENLARGE

Rendering of the proposed St. Ann’s Warehouse. MARVEL ARCHITECTS

“These big capital campaigns for the gold-plated arts and cultural institutions probably put the most pressure on the people who are on that party circuit,” Mr. Remaley said. “But the 1% is not hurting.”

Still, donations to museums and performing-arts groups tend to be dwarfed by gifts to education, religious and human-services organizations. That means cultural organizations have to come up with creative ways to fund capital projects, and to ensure that expansions can be sustained over time.

First off, said Karen Brooks Hopkins, president of the Brooklyn Academy of Music, fundraisers need to break down all the naming opportunities associated with a project and start matchmaking.

The family of a longtime trustee might want to put his or her name on a shiny new building. The recent renovation at Lincoln Center for the Performing Arts also involved naming rights for an illuminated lawn, a grove of trees and a covered passenger drop-off area on the concourse level, as well as for the roadway leading down there.

In other cases, donors might give money to honor an arts figure. In 1999 the Doris Duke Charitable Foundation gave the Brooklyn Academy of Music $3.5 million in conjunction with the renaming of its BAM Majestic Theater as the BAM Harvey Theater, after the organization’s outgoing president and executive producer, Harvey Lichtenstein.

ENLARGE

The new $422 million home of the Whitney Museum of American Art in the Meatpacking District is getting ready for its May opening. CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL

Campaigns also must appeal to the coming generation of philanthropists, donors in their 40s and 50s who tend to have a more hands-on approach to giving, said Jed Bernstein, Lincoln Center’s president.

“It’s not about check-writing or standing back and watching your money go to work,” he said. “They want to feel connected to the organization, not just be a financial underwriter.”

Some campaigns fold in multiple objectives.

A planned renovation of Avery Fisher Hall, home of the New York Philharmonic, involves a number of moving parts. Construction is estimated to cost more than $500 million. Lincoln Center is also paying the Fisher family $15 million to take back naming rights for the venue.

At the same time, the orchestra is embarking on a campaign to expand its endowment, an effort that will “allow us to take maximum advantage of a revitalized performance home when the time comes,” its president, Matthew VanBesien, said.

“It’s easier to raise money for a building because it’s literally concrete,” said Sharon Gersten Luckman, who during her tenure as executive director of Alvin Ailey American Dance Theater presided over a $75 million campaign that created a permanent home for the company in 2004 and established its first endowment.

“Nobody gets all their money from their closest friends and board members,” said Ms. Luckman. “There is a lot of money in New York, and a lot of competition in New York.”

ENLARGE

 

Write to Jennifer Smith at [email protected]

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Nonprofit Dinosaur

What's it like as a nonprofit to be a one of those roman columns we see see still standing but whose only purpose is to stand tall and proud and remind folks that once upon a time?  United Ways, in many communities are like these roman columns. And, the soon-to-be head of the United Way of Philadelphia and Southern New Jersey is going to have to figure out how, as a part of determining its future, the organization can be more than a symbol.  This is one story in today's Philadelphia Inquirer offered to introduce the new executive while also providing fodder that not just the United Way must consider going forward into the future.

POSTED: Tuesday, January 13, 2015, 10:02 AM

 

image: http://media.philly.com/designimages/partnerIcon-Inquirer-2014.jpg

When Pennsylvania Lt. Gov. James Cawley, soon to be out of his current job, takes the helm of the United Way of Greater Philadelphia and Southern New Jersey next month, he will find an organization at a crossroads.

Around the nation and locally, the payroll-deduction donation that has been the United Way's mainstay is on the decline.

"Workplace giving is down," said Laura Otten, director of the Nonprofit Center at La Salle University. "Is there an alternative model, and what do they want it to be? That's the big challenge. That's the elephant in the room."

In an interview Tuesday, Cawley said figuring out that direction will be a priority, in particular proving to the coming generation of donors that United Way's vetting process is superior to simply giving money to individual charities and causes.

 

In the meantime, "I'm thrilled to join an organization whose sole focus is to improve the quality of life for our most vulnerable neighbors," Cawley said in a statement released shortly after the nonprofit's board voted Tuesday morning.

He will start Feb. 9. His current job ends Tuesday.

The organization, which employs 133 people, makes grants that total $60 million throughout the region.

Otten said area nonprofits worry that as the United Way's traditional funding streams decline, it may compete for funds from the same donors they tap. And, she said, United Way is likely to come out ahead.

"They have strong relationships with corporate leaders," Otten said, "so they have a leg up in wooing corporations that too few nonprofits have."

Cawley drew praise from Mayor Nutter, who in a statement noted his "regional perspective on issues."

Mark Price, an economist with the Keystone Research Center in Harrisburg, had a different view, expressed via Twitter.

United Way groups "do work to help people. [You're] putting a guy in charge who spent the last 4 years increasing your case load. Oof," he wrote.

Cawley, 45, a Republican from Wrightstown, Bucks County, acknowledged that not everyone agreed with Republican Gov. Corbett's policies or personnel - particularly the governor's pick to head the Department of Public Welfare, Gary Alexander, who later resigned.

Alexander earned the enmity of many in the nonprofit community by advocating the tightening of eligibility for food stamps.

"I get that there are those that have had problems with some in the administration," Cawley said. "I'm not those people.

"My whole career has been about public service and has been about improving the quality of life for the people who were in whatever community that I was part of. I see this role as continuing that," he said.

Cawley, a lawyer, worked as an aide to State Sen. Robert M. "Tommy" Tomlinson (R., Bucks) before serving as a Bucks County commissioner. He was elected lieutenant governor in 2010.

His political experience will help in his new role, United Way board chairman Lon Greenberg said in a statement Tuesday morning.

"He has spent the majority of his career in the service of others . . . developing productive relationships and leading large groups of constituents to success," said Greenberg, who is also chairman of UGI Corp./AmeriGas.

"As lieutenant governor, he also has a unique understanding of how United Way's impact areas connect, and how strategic improvements in education, income, and health can lift the entire region," Greenberg said.

Cawley replaces Tony Conti, former managing partner of PwC Philadelphia. Conti served as interim United Way president and chief executive after CEO Jill Michal's resignation June 30. Michal had served six years.

Read more at http://www.philly.com/philly/business/20150114_Outgoing_Pa__Lt__Gov__named_head_of_United_Way.html#mLS6uzHK2YzH00rp.99

Nonprofit Board Members as Advocates

In my experience, there's a tendency and a general belief by the members of many nonprofit boards that advocating or let's say, educating legislators in particular is a no-no.  While there are a number of sources that can help refute this belief (Independent Sector, Council on Foundations, Council on Nonprofits) the fact is that there nonprofit board members, representing the mission interests of their nonprofits, have much wisdom to offer and Should!  

It's this fact that makes the reality of this article about a legal matter that has risen as high as the Supreme Court so disconcerting.  The case focuses on the town's ordinance that permits large signage promoting political candidates and permitting only for brief time-spans, very small signs announcing the location of a moved nonprofit or church or a nonprofit or church event.  What puzzles me most is why this issue had to carry this far.  I would think that the many citizens who make-up boards of these many entities could have easily, together, ensured that such an ordinance did not pass.  And yet, no.  But the issue should serve to remind board members that they are not powerless (at minimum, they are often well connected with the powers that be) and they should excercise their voice on matters affecting the ability to pursue mission.

That said, here's the Wall Street Journal story offered as a lesson to encourage board members to know and act on their rights and obligations.

In the town of Gilbert, Ariz., these signs are generally permitted:

Alliance Defending Freedom

But this sign is restricted:

Alliance Defending Freedom

Does that make sense? All signs point to no — at least from the perspective of the nation’s highest court.

The Supreme Court is reviewing the Arizona town’s ordinance that barred a small church without its own building from posting signs each week pointing the public to its temporary locations. At an oral argument Monday, the high court seemed skeptical of the town’s restriction on noncommercial temporary signs and appeared likely to strike it down, reports WSJ’s Jess Bravin:

The law provides an exception for signs with political or ideological messages, a structure that appeared so arbitrary to some justices they might toss it out and ask the town to try again.

Signs posted by the Good News Community Church “can only be placed in the dark of night, the night before the church service,” David Cortman, an attorney with the Alliance Defending Freedom, an advocacy group representing the church, told the court. Like signs directing the way to other activities sponsored by nonprofit charitable, educational or religious groups, they are allowed six square feet, can be posted no more than 12 hours before the event and must be removed one hour after it concludes.

Gilbert, a fast-growing Phoenix suburb, in contrast, allows “ideological” signs of up to 20 square feet to remain indefinitely, and “political” signs advocating candidates or ballot measures can be up to 32 square feet and go up five months before the election.

Several justices found those distinctions puzzling.

“Are you saying they can’t say, ‘Three blocks right and two blocks left’? That’s what this argument is about?” Justice Stephen Breyer said.

“That is what it comes down to,” said Philip Savrin, the town of Gilbert’s lawyer. He said Gilbert gave ideological signs greater leeway “to protect the First Amendment right of anyone to speak on any topic at any time,” while state law governed political messaging.

Gilbert’s rules limiting the size and duration of other temporary directional signs are the town’s way of “preserving beauty, reducing clutter, so on and so forth,” Mr. Savrin said.

Organizations representing thousands of counties and cities filed briefs in the case urging the court to uphold the Gilbert ordinance.

As the WSJ article notes, the issues raised in the case are of increasing importance to religious congregations dealing with shrinking attendance and contributions, which have made it more difficult to maintain permanent facilities.

A decision in the case, Reed v. Town of Gilbert, is expected before July.

 

 

Nonprofit Board Personnel Committee

Nonprofit boards often establish committees to "take care of" tasks the whole board might not want to do or might need done on their behalf.  Often enough these tasks embody what I refer to as "taking care of the homework" that can helpfully inform the full board when decisions are to be made.  

Finance Committees are an excellent example of a small sub-body of a nonprofit that can take a magnifying look at the income and expense statement and the balance sheet to be sure the rest of the board understands the nonprofit's financial condition at a given point of time and most importantly, understand what if any action the board should take.  Executive Committees can be helpful in organizing meeting agendas and provide support to the executive director.  A strategic planning task force can do the support work in moving a planning process along.  All of these committees and task forces have a common function of doing the homework of the board and making recommendations, not decisions.

Lately I've run across some boards that have established personnel committees.  A personnel committee or task force (is established with a specific time-limited assignment) may make sense when it's time to ensure that personnel policies need an update to ensure compliance with federal and state regulations and laws (this is a fiduciary responsibility).  A task force established for recruiting an executive director and maybe even managing the annual executive performance review likely also makes sense.  

But what about a personnel committee that is involved in hiring personnel beyond the executive?  I am a subscriber to the philosophy that the individual who supervises and evaluates, hires.  This would mean to me that the only staff person "hired" by the board is the executive director.  And subsequently, the only reason for a personnel task force: updating personnel policies.  

Thoughts?

Nonprofit Three Legged Stool

Likely you are aware of the three-legged stool paradigm that explains the role nonprofits play in a capitalist-democratic society.  The three legs: for-profit/business/corporate; government; and, nonprofit.  The first leg: business, lives in the marketplace to produce goods and service in exchange for profits.  The second leg: governent, lives in the marketplace to, in exchange for taxes and other exchanges, address the lowest common denominator of needs.  And nonprofits - fill the void between the two - offering goods, services and behavioral change options (education) where there's not enough economic incentive to produce by the business sector and not enough demand by the public.

The Philadelphia Inquirer story about a group of scuba divers organized as a nonprofit who perform a bunch of varying civic benefits nicely highlights the role the nonprofit sector plays where the public has effectively determined it does not have the resources (effectively, not enough people will be affected by the expenditure) nor is there enough economic incentive by the for-profit sector.  

The three-legged stool paradigm does have an edge of cruelty to the few who may be directly ffected by the benefits afforded by the divers.  Sobering reality, no?